Cryptocurrencies an all too easy prey for crime?
Crypto currencies know their dangers. Not only the currency and its intrinsically unpredictable value can cost people dearly, but so can the fraud opportunities that crypto currencies offer create victims and hands that are left empty.
Articles with garish titles like "Belgians lost at least 3 million euros in crypto coins last year" don't raise lawyers' eyebrows for a while. Fraud with crypto currencies and blockchain technology is, after all, extremely common. While any new market or technology always has a certain attraction for impure practices, the attraction of crypto currencies to these impurities seems to be particularly strong. The 'anonymity' that lies behind the blockchain (the underlying technology of crypto currencies) and the lack of regulation prove to be a breeding ground for all kinds of crypto fraud.
That cryptofraud is a trend is certain. As specialists in this field, we are increasingly confronted with victims, as well as perpetrators, of crypto fraud.
In this article, from our experience in this matter, we try to give you a concise overview of the most common "crypto crimes" and their criminal qualifications.
A false sense of security
Crypto coins are based on a cryptographic system and are therefore often referred to as safe labeled. Only the owner of the private key (private key that provides access to the crypto wallet) can, in principle, trade or transfer its crypto tokens. In principle, because cryptocurrency transactions are cryptographically encrypted and transmitted, it should be almost impossible to hack transactions, steal crypto coins or create crypto coins of one's own.
However, many crypto crimes are just taking place because people are using such private keys, either through a simple theft either through hacking, manages to obtain. Another possible cryptocurrency crime one can fall victim to today comes about because crypto tokens are maliciously marketed that are not actually there.
Theft with false keys (art. 467, paragraph 1 Criminal Code) or computer fraud (art. 504quater Penal Code)?
Crypto coins are susceptible to theft. By this we mean theft as it is popularly used. Yet the legal qualification of "taking" crypto coins has often been questioned in recent years.
Transferring crypto coins to one's own wallet after obtaining the private key unlawfully (e.g., through hacking or removal of a physical code), may legally qualify as theft with false keys.
Keys its, according to criminal law, after all, all mechanisms that open or close a lock (here: access to the crypto wallet), such as cards, passwords, number combinations and electronic impulses. Consequently, the private key that provides access to the crypto wallet can be considered a "key" within the meaning of the criminal code. If that key is used against the will of its owner, then that key is criminally considered a false key considered.[1]
It follows that someone who unlawfully steals a private key and uses it to appropriate crypto tokens - which do not belong to him - is guilty of theft with false keys.
More recently, since the enactment of the new Article 504quater Criminal Code, however, the fraudulent acquisition of a pecuniary advantage for oneself or for another by means of data manipulation is no longer covered by the application of Article 467, paragraph 1 Criminal Code [2]
If there are "data manipulation" within the meaning of Article 504quater of the Criminal Code, one should consequently consider the crime as IT fraud and no longer qualify as theft.
The fraudulent removal of crypto tokens implies a manipulation of the underlying blockchain and the data that make up its building blocks and can be considered a "data manipulation."
The difference between the qualification of crimes "theft with false keys" and "IT fraud" is not merely theoretical, but also brings consequences in terms of sentencing and burden of proof.
External hacking (art. 550 bis Criminal Code)
Breaking into an information technology system to obtain a private key qualifies by itself as the crime external hacking.
Indeed, he who knowingly and intentionally obtains admission to an information system to which he is not entitled is guilty of this crime.
The fact that an offender's intent in taking crypto currencies is to gain an advantage for himself (a fraudulent intent) makes the crime even more punishable (cfr. art. 550bisCriminal Code) than the basic crime hacking. [3]
Swindling - offering crypto coins that turn out not to be any (art. 496 Criminal Code)
"If it's too good to be true, it is", is the slogan of the awareness campaign through which our government is trying to warn the population about large-scale cryptocurrency fraud.
Cryptocurrency is booming, and scammers know that, too. By capitalizing on the hype that crypto currencies entail, scammers easily succeed in making people believe that empty boxes are mountains of gold.
Promises like "if you invest 100 euros, you will get back 1000 euros" and "a monthly payment of thousands of dollars is not unusual" do away with the necessary dose of healthy suspicion in many. With well padded lectures, meetings and convincing websites, investors are being convinced to invest more and more in crypto currencies. "Later you will then reap the benefits", one claims.
In reality, these fruits are very often simply not there. Well-organized scammers often know from the beginning that such fruits will never be there either.
Such conduct qualifies as the crime scam. Indeed, one disposes of things, referred to in article 496 Sw., that belong to another by using cunning subterfuges.
However, proving the crime of fraud is not easy. (read more here)
When you become the victim of such a scam, you do well to respond quickly and professionally.
How to respond.
Bannister's expertise in cases involving crypto fraud is vast. From her experiences in previous cases, Bannister learned that every crypto fraud case must be handled with due diligence, expertise, speed and appropriate strategy. After all, one file is not the other.
Bannister also offers victims of cryptofraud the opportunity for group representation. By pooling the common complaints of several victims, Bannister ensures that the investigation is steered in the right direction, namely toward a positive outcome.
Would you like more information about your options as a victim of crypto fraud or would you like to be assisted by a specialized lawyer? Please feel free to contact us at info@bannister.be or at 03.369.28.00.
[1] Antwerp Feb. 25, 1994, Limb.Rechtsl. 1994, 81; Corr. Bruges July 19, 2000, RW 2000-01, 918, note.
[2] Cass. (2nd k.) May 6, 2003, AR P.03.0366.N
[3] Art. 550bis §3 Sw.
May 20, 2021
